In many Indian families, , there is only one earning member in the family. This is especially true since the society moved towards nuclear families. Naturally, the sole earner bears a weight few truly understand until they experience it themselves.

I have been the sole earner in my family for a long time, and it has taught me some valuable lessons that no B-school could ever teach. Incidentally, the hardest lessons were learnt when I was admitted – not in a B-school but in the ICU. It was in the year 2016, and as I have written in my book “The Price of Ignorance”, I had no clue how bad my health condition was.

Let me share some of those realisations here – of course, we will restrict the discussions only to money lessons and not health. I will present the lessons in the form of answers to various questions and concerns shared by many. The answers are based on my personal experiences being in the situation as well as my work in the field of investor education, and coaching of financial advisers and professionals. Over the years, I have seen the financial and emotional challenges of thousands of individuals – either directly or through their advisers.

Q: What kind of financial pressures do family’s sole bread-earners face?

Every rupee spent, every time, whether it’s on groceries or healthcare, directly may affect their sense of stability. It becomes worse if there are no backup incomes or investments, especially during sudden job loss or health issues.

I experienced this problem first-hand when I landed in the ICU due to a health complication. While it inspired me to write The Price of Ignorance, I could not help but think about what would happen to my family if …

The questions that the sole earners frequently encounter are,

• “Have I done enough for my family?”
• “Will they live comfortably after I go?” and
• “Do they have the right access to my wealth?”

Q: What is the best precautionary measure in times of crisis as a sole earner?

While there is no single precautionary measure that can be called “the best”. Having said that, the precautionary measure is required against the possibility of something unpleasant and unpredictable. In such a situation, one must stay prepared financially.

One may consider the following as guidelines to prepare financially:

• Contingency fund:
  • Create an emergency fund that covers six to twelve months of expenses. If your income is less certain, or if you are ultra-conservative, you may have a larger fund, may be to cover expenses for the next 2 years.
• Buying insurance
  • A comprehensive health insurance policy covering all the family members
  • Buying a critical illness insurance for the family members, including one’s own self
  • Buying a life insurance policy on the life of oneself – the sole bread-earner of the family
• Providing for repayment of loan, if any
• Maintaining a mix of liquid and long-term investments for stability.

Then comes the most important, yet often ignored part: Do your family members know about your savings, insurance, and investments?

It is critical to ensure your family members have access to your funds and documents. Often, people create emergency funds but keep the access (and information) only with them. Similarly, they buy health insurance, and the family is not aware. In times of crisis, this becomes meaningless.

The sole purpose of creating an emergency fund or buying an insurance policy was to access it when needed. If the family is not aware of such financial instruments, and if they do not know how to access the funds, it is worse than not having an emergency fund or insurance.

Your preparation should include sharing details about accounts, documents, and policies with trusted family members. In fact, one must share the names and contact numbers of financial experts (insurance agents, bank managers, wealth managers, investment advisers, financial planners, chartered accountant, etc.) with the family members. These professionals stand like a rock by your family’s side in your absence and ensure they navigate the tough times without additional worries about money.

You may refer to the annexure-1 to my book “Moneywise – Perspectives for Women”. The title of the said annexure is: “What the family must know”.

Q: How does your family access the funds in case of an emergency?

While it might feel like the answer is straightforward, it is not.

On many instances, the families have realised only at a crisis moment that the nobody other than the sole earner knew about the accounts, passwords, insurance policies and investments. While this was partially covered in the earlier question under “preparation”, one small hack that works is to set up a joint account, so that more than one person has access to the financial instruments and accounts.

But life is unpredictable, and sometimes emergencies can happen to multiple family members. Setting up multiple joint accounts may sound like a solution; but this throws another challenge – being able to track and manage too many instruments and accounts. In such a situation the financial professional, e.g., a financial planner or investment adviser or mutual fund distributor, or an insurance agent may come to the rescue, since they know the processes involved in getting the funds released. In fact, their role may start with setting up the accounts, insurance policies and investments with a view to ensuring ease of access to funds during emergencies.

Q: What type of financial pitfalls can sole earners avoid through planning?

Financial planning can help you avoid many common money mistakes that threaten your financial stability. Here are a few key pitfalls to watch out for:

1)      Debt Traps: During a crisis, the easiest solution is often the worst solution. Credit cards and microloans can lead to high-interest debt cycles. Smart planning and emergency savings help you avoid this trap.

2)      Unplanned Expenses: Let’s face it. There will always be expenses we did not plan for. This might include a vacation, vehicle maintenance, buying gifts during a wedding or festivities, etc. Without budgeting for such events, these expenses can destabilise your savings.

 3)      Lifestyle Inflation: he entire point of making money is to live a better life. As we keep upgrading our lifestyle, our expenses also grow. Maybe we start paying for a gym subscription or buy healthier food. This lifestyle upgrade also means more expenses.

 4)      Tax Inefficiency: Sometimes, expenses are not always in our hands. Take tax, for example. The budget keeps changing, and new tax slabs are introduced. While the government creates these slabs keeping everyone in mind, sometimes it can lead to paying more tax. Sole earners often overlook how much money can be saved through tax planning. By understanding deductions, exemptions, and investment-linked benefits, you can legally reduce taxes and boost savings⁴. Consulting a financial advisor is a wise move.

With awareness and consistent effort, these pitfalls can be avoided. Remember, the goal is not just to earn more—it’s to make your money last longer and work smarter.

Conclusion

Being the sole earner is a tough job that demands hard work. But with financial literacy, awareness and planning, the job can be made a lot easier.

So, create a plan and make sure your family has the right information and access to the financial instruments, resources and documents they need them the most, and you may not be around. Connect them to the experts they can seek help from during such times.

After all, you have made the provisions for the safety and well-being of your family, ensure this comes in handy exactly when needed.

#Moneywise

#PriceOfIgnorance